Capital One Reports Earnings for 2003
Capital One Reports Earnings for 2003
Printer Friendly Version of the Press Release (pdf format)
CONTACT: Paul Paquin, V.P., Investor Relations, +1-703-720-2456, or
Tatiana Stead, Director, Corporate Media, +1-703-720-2352, both of Capital One
Financial Corporation
Web site: http://www.capitalone.com
(COF)
Printer Friendly Version of the Financial Supplement (pdf format)
Printer Friendly Version of the Earnings Conference Call Presentation (pdf format)
23% EPS Increase Year Over Year
Company Increases 2004 Earnings Guidance
MCLEAN, Va., Jan. 21 /PRNewswire-FirstCall/ -- Capital One Financial Corporation (NYSE: COF) today announced 23 percent earnings per share growth for 2003. The company also announced that it began expensing all stock based compensation, including stock options, in 2003 and will continue to do so moving forward. Additionally, the company increased its 2004 earnings guidance to be between $5.30 and $5.60 per share (fully diluted).
Earnings were $1.1 billion, or $4.85 per share (fully diluted), in 2003 compared with $0.9 billion, or $3.93 per share, in 2002. Earnings for the fourth quarter of 2003 were $265.7 million, or $1.11 per share (fully diluted), compared with earnings of $239.7 million, or $1.05 per share, for the comparable quarter of the prior year and $275.5 million, or $1.17 per share, in the previous quarter.
"2003 was another strong year for Capital One. Earnings per share grew 23 percent, managed loans increased 19 percent, our charge-off rate improved dramatically throughout the year, and our diversification efforts generated meaningful profits," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "Capital One is well positioned for continued success in 2004."
During the fourth quarter of 2003, Capital One grew its managed loan portfolio by $4.0 billion to $71.2 billion. The managed charge-off rate declined to 5.32 percent in the fourth quarter of 2003, from 5.44 percent in the previous quarter and 6.21 percent in the comparable quarter of the prior year. The managed delinquency rate (30+ days) declined to 4.46 percent as of December 31, 2003 from 4.65 percent as of the end of the previous quarter and 5.60 percent as of December 31, 2002.
The company continues to diversify its portfolio beyond U.S. credit cards and shift its product mix upmarket. As a result, Capital One's managed revenue margin declined to 13.89 percent in the fourth quarter of 2003 from 14.36 percent in the previous quarter. Management expects revenue margins and its charge-off rate to be somewhat lower in 2004 than in 2003.
"In view of the projected improvement in our credit performance and somewhat lower growth, our allowance for loan losses in 2004 is expected to continue to decline," said Gary L. Perlin, Capital One's Chief Financial Officer. "In addition," Perlin said, "Capital One will now expense stock options. This accounting policy was implemented starting in the first quarter of 2003. The impact in 2003 was $6.3 million. The impact moving forward is expected to be substantially higher and has been included in the company's earnings guidance for 2004."
The expensing of stock options is being implemented in line with the Statement of Financial Accounting Standard No. 123, "Accounting for Stock Based Compensations" ("SFAS 123"), under the prospective method for all awards granted, modified or settled on or after January 1, 2003. Under the expense recognition provisions of SFAS 123 the calculated fair value of stock based compensation is amortized into expense over the options' vesting period. The financial results for previous quarters in 2003 have been adjusted to reflect this change.
The company generates earnings from its managed loan portfolio, which includes both on-balance sheet loans and securitized loans. For this reason, the company believes managed financial measures to be useful to stakeholders. In compliance with Regulation G of the Securities and Exchange Commission, the company is providing a numerical reconciliation of managed financial measures to comparable measures calculated on a reported basis using generally accepted accounting principles (GAAP). Please see the schedule titled "Reconciliation to GAAP Financial Measures" attached to this release for more information.
The company cautions that its current expectations in this release, in the presentation slides available on the company's website (www.capitalone.com), and on its Form 8-K dated January 21, 2004, for 2004 earnings, charge-off rates, margins, and allowance for loan losses, and loan growth and composition are forward-looking statements and actual results could differ materially from current expectations due to a number of factors, including: continued intense competition from numerous providers of products and services which compete with our businesses; changes in our aggregate accounts and balances and the actual growth rate and composition thereof; the company's ability to access the capital markets at attractive rates and terms to fund its operations and future growth; and general economic conditions affecting consumer income and spending, which may affect consumer bankruptcies, defaults, and charge-offs. A discussion of these and other factors can be found in Capital One's annual report and other reports filed with the Securities and Exchange Commission, including, but not limited to, Capital One's report on Form 10-Q for the quarter ended September 30, 2003.
About Capital One
Headquartered in McLean, Virginia, Capital One Financial Corporation (www.capitalone.com) is a holding company whose principal subsidiaries, Capital One Bank and Capital One, F.S.B., offer consumer lending products and Capital One Auto Finance, Inc., which offers auto loan products. Capital One's subsidiaries collectively had 47.0 million managed accounts and $71.2 billion in managed loans outstanding as of December 31, 2003. Capital One, a Fortune 500 company, is one of the largest providers of MasterCard and Visa credit cards in the world. Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 500 index.
NOTE: Fourth quarter 2003 financial results, SEC Filings, and fourth quarter earnings conference call slides are accessible on Capital One's home page (www.capitalone.com). Choose "Investors" under "Company Information" on the left side of the page to view and download the earnings press release, slides, and other financial information. Additionally, a webcast of today's 5:00pm (EDT) earnings conference call is accessible through the same link.
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY REPORTED BASIS
2003 2003 2002
(in millions, except per share
data as noted) Q4(5) Q3(5) Q4
Earnings (Reported Basis)
Net Interest Income $ 664.1 $ 703.9 $ 731.0
Non-Interest Income 1,437.5 1,363.2 1,320.3
Total Revenue(1) 2,101.6 2,067.1 2,051.4
Provision for Loan Losses 390.4 364.1 543.8
Marketing Expenses 290.1 316.0 210.8
Operating Expenses 999.3 925.8 910.2
Income Before Taxes and Accounting
Change 421.7 461.2 386.6
Tax Rate 37.0 % 37.0 38.0 %
Cumulative Effect of Accounting
Change, net of tax(2) - 15.0 -
Net Income $ 265.7 $ 275.5 $ 239.7
Common Share Statistics
Basic EPS $ 1.16 $ 1.23 $ 1.08
Diluted EPS $ 1.11 $ 1.17 $ 1.05
Dividends Per Share $ 0.03 $ 0.03 $ 0.03
Book Value Per Share (period end) $ 25.75 $ 24.53 $ 20.44
Stock Price Per Share (period end) $ 61.29 $ 57.04 $ 29.72
Total Market Capitalization
(period end) $14,405.7 $13,073.6 $6,722.5
Shares Outstanding (period end) 235.0 229.2 226.2
Shares Used to Compute Basic EPS 228.1 224.6 221.8
Shares Used to Compute Diluted EPS 239.2 236.3 228.2
Reported Balance Sheet Statistics
(period avg.)
Average Loans $ 31,297 $ 28,949 $ 27,260
Average Earning Assets $ 40,792 $ 38,133 $ 34,075
Average Assets $ 45,002 $ 41,704 $ 37,208
Average Equity $ 5,887 $ 5,424 $ 4,568
Net Interest Margin 6.51 % 7.38 % 8.58 %
Revenue Margin 20.61 % 21.68 % 24.08 %
Risk Adjusted Margin (3) 17.02 % 17.66 % 19.18 %
Return on Average Assets (ROA) 2.36 % 2.64 % 2.58 %
Return on Average Equity (ROE) 18.05 % 20.32 % 20.99 %
Net Charge-Off Rate 4.68 % 5.30 % 6.13 %
Net Charge-Offs $ 366.0 $ 383.2 $ 417.7
Reported Balance Sheet Statistics
(period end)
Loans $ 32,850 $ 30,618 $ 27,344
Delinquency Rate (30+ days) 4.79 % 5.03 % 6.12 %
Total Assets $ 46,284 $ 43,446 $ 37,382
Allowance as a % of reported loans 4.86 % 5.13 % 6.29 %
Capital (4) $ 6,881.6 $ 6,449.8 $5,440.4
Capital to Assets Ratio 14.87 % 14.85 % 14.55 %
Capital plus Allowance to Assets Ratio 18.31 % 18.46 % 19.15 %
(1) In accordance with the Company's finance charge and fee revenue
recognition policy, the amounts billed to customers but not recognized
as revenue were as follows: Q4 2003 - $454.8 million, Q3 2003 -
$481.0 million, Q2 2003 - $497.3 million, Q1 2003 - $519.7 million,
and Q4 2002 - $675.7 million.
(2) Net charge from the adoption of FASB Interpretation No. 46,
Consolidation of Variable Interest Entities.
(3) Risk adjusted margin is total revenue less net charge-offs as a
percentage of average earning assets.
(4) Includes preferred interests and mandatory convertible securities.
(5) In the fourth quarter 2003, the Company adopted the expense
recognition provisions of Statement of Financial Accounting Standard
No. 123, ("SFAS 123") Accounting for Stock Based Compensation, under
the prospective method for all awards granted, modified or settled
after January 1, 2003. Certain prior period amounts and statistics
have been restated in accordance with SFAS 123.
NOTE: Additional historical financial and statistical information can be
found on Capital One's home page (www.capitalone.com).
Choose "Investors" under "Company Information" on the left side of
the page to view and download the earnings press release.
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUPPLEMENT REPORTED BASIS
2003 2003 2002
(in millions, except per share
data and as noted) Q4(3) Q3(3) Q4
Revenue & Expense Statistics
(Reported)
Net interest income growth
(annualized) (23)% 13 % 5 %
Non interest income growth
(annualized) 22 % 16 % (53)%
Revenue growth (annualized) 7 % 15 % (34)%
Loan revenue margin(1) 26.78 % 28.51 % 29.95 %
Loan risk adjusted margin(2) 22.10 % 23.22 % 23.82 %
Operating expense as a % of revenues 47.55 % 44.79 % 44.37 %
Operating expense as a % of average
loans (annualized) 12.77 % 12.79 % 13.36 %
Per Account Statistics (Reported)
Net interest income per account
(annualized) $ 56.86 $ 61.08 $ 61.22
Non interest income per account
(annualized) $ 123.07 $ 118.28 $ 110.57
Revenue per account (annualized) $ 179.92 $ 179.38 $ 171.78
Growth Statistics (Reported)
Consumer loan growth $ 2,232 $ 3,769 $ (254)
% loan growth Q over Q (annualized) 29 % 56 % (4)%
% loan growth Y over Y 20 % 11 % 31 %
(1) Loan revenue margin is total loan revenue, loan interest income less
interest expense plus non-interest income, as a percent of average
loans outstanding for the period. Loan interest expense is calculated
using the cost of funds rate applied to the average consumer loan
balance.
(2) Loan risk adjusted margin is total loan revenue, loan net interest
income and non-interest income, less net charge-offs as a percentage
of average loans outstanding for the period.
(3) In the fourth quarter 2003, the Company adopted the expense
recognition provisions of Statement of Financial Accounting Standard
No. 123, ("SFAS 123") Accounting for Stock Based Compensation, under
the prospective method for all awards granted, modified or settled
after January 1, 2003. Certain prior period amounts and statistics
have been restated in accordance with SFAS 123.
NOTE: Additional historical financial and statistical information can be
found on Capital One's home page (www.capitalone.com).
Choose "Investors" under "Company Information" on the left side of
the page to view and download the earnings press release.
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY MANAGED BASIS(1)
2003 2003 2002
(in millions, except per share
data s noted) Q4(5) Q3(5) Q4
Earnings (Managed Basis)
Net Interest Income $ 1,571.7 $ 1,500.8 $ 1,442.2
Non-Interest Income 1,077.5 1,049.2 1,086.9
Total Revenue(2) 2,649.2 2,550.0 2,529.1
Provision for Loan Losses 938.0 847.0 1,021.5
Marketing Expenses 290.1 316.0 210.8
Operating Expenses 999.3 925.8 910.2
Income Before Taxes and Accounting
Change 421.7 461.2 386.6
Tax Rate 37.0 % 37.0 % 38.0 %
Cumulative Effect of Accounting
Change, net of tax(3) - 15.0 -
Net Income $265.7 $ 275.5 $ 239.7
Managed Balance Sheet Statistics
(period avg.)
Average Loans $ 68,679 $ 63,691 $ 57,669
Average Earning Assets $ 76,277 $ 71,022 $ 62,789
Average Assets $ 81,733 $ 75,831 $ 67,037
Net Interest Margin 8.24 % 8.45 % 9.19 %
Revenue Margin 13.89 % 14.36 % 16.11 %
Risk Adjusted Margin (4) 9.10 % 9.48 % 10.41 %
Return on Average Assets (ROA) 1.30 % 1.45 % 1.43 %
Net Charge-Off Rate 5.32 % 5.44 % 6.21 %
Net Charge-Offs $ 913.6 $ 866.1 $ 895.5
Cost Per Account (in dollars) $ 85.55 $ 80.34 $ 76.22
Managed Balance Sheet Statistics
(period end)
Loans $ 71,245 $ 67,260 $ 59,747
Delinquency Rate (30+ days) 4.46 % 4.65 % 5.60 %
Number of Accounts (000's) 47,038 46,406 47,369
Total Assets $ 83,999 $ 79,465 $ 69,205
Capital to Assets Ratio 8.19 % 8.12 % 7.86 %
Capital plus Allowance to
Assets Ratio 10.09 % 10.09 % 10.35 %
(1) The information in this statistical summary reflects the adjustment to
add back the effect of securitization transactions qualifying as sales
under generally accepted accounting principles. See accompanying
schedule - "Reconciliation to GAAP Financial Measures."
(2) In accordance with the Company's finance charge and fee revenue
recognition policy, the amounts billed to customers but not recognized
as revenue were as follows: Q4 2003 - $454.8 million, Q3 2003 -
$481.0 million, Q2 2003 - $497.3 million, Q1 2003 - $519.7 million,
and Q4 2002 - $675.7 million.
(3) Net charge from the adoption of FASB Interpretation No. 46,
Consolidation of Variable Interest Entities.
(4) Risk adjusted margin is total revenue less net charge-offs as a
percentage of average earning assets.
(5) In the fourth quarter 2003, the Company adopted the expense
recognition provisions of Statement of Financial Accounting Standard
No. 123, ("SFAS 123") Accounting for Stock Based Compensation, under
the prospective method for all awards granted, modified or settled
after January 1, 2003. Certain prior period amounts and statistics
have been restated in accordance with SFAS 123.
NOTE: Additional historical financial and statistical information can be
found on Capital One's home page (www.capitalone.com).
Choose "Investors" under "Company Information" on the left side of
the page to view and download the earnings press release.
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUPPLEMENT MANAGED BASIS(1)
2003 2003 2002
(in millions, except per share
data and as noted) Q4(4) Q3(4) Q4
Revenue & Expense Statistics
(Managed)
Net interest income growth
(annualized) 19 % 12 % 2 %
Non interest income growth
(annualized) 11 % 1 % (34)%
Revenue growth (annualized) 16 % 7 % (15)%
Loan revenue margin(2) 15.54 % 16.15 % 17.58 %
Loan risk adjusted margin(3) 10.22 % 10.71 % 11.37 %
Operating expense as a % of revenues 37.72 % 36.31 % 35.99 %
Operating expense as a % of average
loans (annualized) 5.82 % 5.81 % 6.31 %
Per Account Statistics (Managed)
Net interest income per account
(annualized) $ 134.56 $ 130.23 $ 120.77
Non interest income per account
(annualized) $ 92.25 $91.05 $91.02
Revenue per account (annualized) $ 226.81 $ 221.28 $ 211.79
Net income per account (annualized) $22.75 $23.91 $20.07
Growth Statistics (Managed)
Average accounts (000's) 46,722 46,096 47,766
Net new accounts per quarter (000's) 632 621 (794)
% account growth Q over Q
(annualized) 5 % 5 % (7)%
% account growth Y over Y (1)% (4)% 8 %
Consumer loan growth $ 3,985 $ 6,524 $ 2,864
% loan growth Q over Q (annualized) 24 % 43 % 20 %
% loan growth Y over Y 19 % 18 % 32 %
Balance Sheet Measures
% off-balance sheet securitizations 53 % 54 % 53 %
% at introductory rate 10 % 11 % 10 %
Segment Statistics
US Card:
Loans receivable $ 46,279 $ 44,300 $ 40,862
Net income (loss) $ 322.7 $276.2 $112.5
Net charge-off rate 6.16 % 6.16 % 6.90 %
Delinquency rate 4.60 % 4.88 % 6.07 %
Auto Finance:
Loans receivable $ 8,467 $ 8,008 $ 6,992
Net income (loss) $ 34.4 $27.3 $8.8
Net charge-off rate 4.30 % 5.10 % 4.83 %
Delinquency rate 7.55 % 7.07 % 7.15 %
Global Financial Services:
Loans receivable $ 16,508 $ 14,960 $ 11,868
Net income (loss) $3.3 $21.0 $58.8
Net charge-off rate 3.69 % 3.78 % 3.79 %
Delinquency rate 2.70 % 2.87 % 3.08 %
(1) The information in this statistical summary reflects the adjustment
to add back the effect of securitization transactions qualifying as
sales under generally accepted accounting principles. See
accompanying schedule - "Reconciliation to GAAP Financial Measures."
(2) Loan revenue margin is total loan revenue, loan interest income less
interest expense plus non-interest income, as a percent of average
loans outstanding for the period. Loan interest expense is calculated
using the cost of funds rate applied to the average consumer loan
balance.
(3) Loan risk adjusted margin is total loan revenue, loan net interest
income and non-interest income, less net charge-offs as a percentage
of average loans outstanding for the period.
(4) In the fourth quarter 2003, the Company adopted the expense
recognition provisions of Statement of Financial Accounting Standard
No. 123, ("SFAS 123") Accounting for Stock Based Compensation, under
the prospective method for all awards granted, modified or settled
after January 1, 2003. Certain prior period amounts and statistics
have been restated in accordance with SFAS 123.
NOTE: Additional historical financial and statistical information can be
found on Capital One's home page (www.capitalone.com).
Choose "Investors" under "Company Information" on the left side of
the page to view and download the earnings press release.
CAPITAL ONE FINANCIAL CORPORATION
Reconciliation to GAAP Financial Measures
For the Three Months Ended December 31, 2003
(dollars in thousands)(unaudited)
The Company's consolidated financial statements prepared in accordance
with generally accepted accounting principles ("GAAP") are referred to as
its "reported" financial statements. Loans included in securitization
transactions which qualified as sales under GAAP have been removed from
the Company's "reported" balance sheet. However, interest income,
interchange, fees and recoveries generated from the securitized loan
portfolio net of charge-offs in excess of the interest paid to investors
of asset-backed securitizations are recognized as non-interest income on
the "reported" income statement.
The Company's "managed" consolidated financial statements add back the
effects of securitization transactions qualifying as sales under GAAP.
The Company generates earnings from its "managed" loan portfolio which
includes both the on-balance sheet loans and off-balance sheet loans.
The Company's "managed" income statement takes the components of the non-
interest income generated from the securitized portfolio and distributes
the revenue to appropriate income statement line items from which it
originated. For this reason the Company believes the "managed"
consolidated financial statements and related managed metrics to be
useful to stakeholders.
Total Total
Reported Adjustments(1) Managed(2)
Income Statement Measures
Net interest income $ 664,101 $ 907,581 $ 1,571,682
Non-interest income $ 1,437,491 $ (360,021) $ 1,077,470
Total revenue $ 2,101,592 $ 547,560 $ 2,649,152
Provision for loan losses $ 390,405 $ 547,560 $ 937,965
Balance Sheet Measures
Consumer loans $ 32,850,269 $ 38,394,527 $ 71,244,796
Total assets $ 46,283,706 $ 37,715,556 $ 83,999,262
Average consumer loans $ 31,297,123 $ 37,381,754 $ 68,678,877
Average earning assets $ 40,792,212 $ 35,484,929 $ 76,277,141
Average total assets $ 45,002,097 $ 36,730,742 $ 81,732,839
Delinquencies $ 1,573,459 $ 1,604,470 $ 3,177,929
(1) Includes adjustments made related to the effects of securitization
transactions qualifying as sales under GAAP and adjustments made to
reclassify to "managed" loans outstanding the collectible portion of
billed finance charge and fee income on the investors' interest in
securitized loans excluded from loans outstanding on the "reported"
balance sheet in accordance with Financial Accounting Standards Board
Staff Position, "Accounting for Accrued Interest Receivable Related to
Securitized and Sold Receivables under FASB Statement 140, Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities", issued April 2003.
(2) The Managed loan portfolio does not include auto loans which have been
sold in whole loan sale transactions where the Company has retained
servicing rights.
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets(1)
(in thousands)(unaudited)
December 31 September 30 December 31
2003 2003 2002
Assets:
Cash and due from banks $ 382,212 $ 250,514 $ 277,509
Federal funds sold and resale
agreements 1,010,319 889,106 373,828
Interest-bearing deposits at
other banks 587,751 163,025 267,441
Cash and cash equivalents 1,980,282 1,302,645 918,778
Securities available for sale 5,866,628 5,408,671 4,423,677
Consumer loans 32,850,269 30,617,843 27,343,930
Less: Allowance for
loan losses (1,595,000) (1,570,000) (1,720,000)
Net loans 31,255,269 29,047,843 25,623,930
Accounts receivable from
securitizations 4,748,962 5,204,170 3,606,549
Premises and equipment, net 902,600 898,997 770,326
Interest receivable 214,295 201,783 217,512
Other 1,315,670 1,382,228 1,821,608
Total assets $46,283,706 $43,446,337 $37,382,380
Liabilities:
Interest-bearing deposits $22,416,332 $20,936,517 $17,325,965
Senior notes 7,016,020 6,338,772 5,565,615
Other borrowings 7,796,613 7,519,770 6,365,075
Interest payable 256,015 231,365 236,081
Other 2,746,915 2,796,719 3,266,473
Total liabilities 40,231,895 37,823,143 32,759,209
Stockholders' Equity:
Common stock 2,364 2,305 2,271
Paid-in capital, net 1,937,302 1,833,520 1,704,470
Retained earnings and cumulative
other comprehensive income 4,161,666 3,836,535 2,951,382
Less: Treasury stock, at cost (49,521) (49,166) (34,952)
Total stockholders' equity 6,051,811 5,623,194 4,623,171
Total liabilities and
stockholders' equity $46,283,706 $43,446,337 $37,382,380
(1) Certain prior period amounts have been reclassified to conform to the
current period presentation for the Financial Accounting Standards
Board Staff Position, "Accounting for Accrued Interest Receivable
Related to Securitized and Sold Receivables under FASB Statement No.
140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities," that was issued in April 2003.
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income(1)
(in thousands, except per share data)(unaudited)
Three Months Ended
December 31 September 30 December 31
2003(2) 2003(2) 2002
Interest Income:
Consumer loans, including
past-due fees $ 969,571 $ 989,318 $ 1,013,181
Securities available for sale 52,328 49,440 50,283
Other 65,884 64,267 50,200
Total interest income 1,087,783 1,103,025 1,113,664
Interest Expense:
Deposits 237,624 224,078 215,144
Senior notes 123,409 114,989 108,474
Other borrowings 62,649 60,037 59,014
Total interest expense 423,682 399,104 382,632
Net interest income 664,101 703,921 731,032
Provision for loan losses 390,405 364,144 543,758
Net interest income after
provision for loan losses 273,696 339,777 187,274
Non-Interest Income:
Servicing and securitizations 918,762 820,515 645,740
Service charges and other
customer-related fees 380,925 405,063 475,384
Interchange 106,414 95,879 94,095
Other 31,390 41,751 105,103
Total non-interest income 1,437,491 1,363,208 1,320,322
Non-Interest Expense:
Salaries and associate benefits 408,884 388,819 380,600
Marketing 290,145 316,026 210,847
Communications and data processing 116,217 107,385 106,149
Supplies and equipment 83,804 88,753 95,963
Occupancy 51,645 47,205 46,933
Other 338,777 293,575 280,528
Total non-interest expense 1,289,472 1,241,763 1,121,020
Income before income taxes and
cumulative effect of accounting
change 421,715 461,222 386,576
Income taxes 156,034 170,653 146,899
Income before cumulative effect
of accounting change 265,681 290,569 239,677
Cumulative effect of accounting
change, net of taxes of $8,832 15,037 -
Net income $ 265,681 $ 275,532 $ 239,677
Basic earnings per share before
cumulative effect of
accounting change $ 1.16 $ 1.29 $ 1.08
Basic earnings per share after
cumulative effect of
accounting change $ 1.16 $ 1.23 $ 1.08
Diluted earnings per share before
cumulative effect of
accounting change $ 1.11 $ 1.23 $ 1.05
Diluted earnings per share after
cumulative effect of
accounting change $ 1.11 $ 1.17 $ 1.05
Dividends paid per share $ 0.03 $ 0.03 $ 0.03
Year Ended
December December
2003(2) 2002
Interest Income:
Consumer loans, including
past-due fees $ 3,932,295 $ 3,792,461
Securities available for sale 192,594 184,407
Other 242,765 203,898
Total interest income 4,367,654 4,180,766
Interest Expense:
Deposits 891,650 811,889
Senior notes 448,646 422,529
Other borrowings 242,269 227,236
Total interest expense 1,582,565 1,461,654
Net interest income 2,785,089 2,719,112
Provision for loan losses 1,517,497 2,149,328
Net interest income after provision
for loan losses 1,267,592 569,784
Non-Interest Income:
Servicing and securitizations 3,211,662 2,805,501
Service charges and other
customer-related fees 1,630,185 1,937,735
Interchange 376,785 447,747
Other 197,292 275,853
Total non-interest income 5,415,924 5,466,836
Non-Interest Expense:
Salaries and associate benefits 1,570,415 1,557,887
Marketing 1,118,422 1,070,624
Communications and data processing 448,110 406,071
Supplies and equipment 344,049 357,953
Occupancy 185,179 205,531
Other 1,190,548 987,515
Total non-interest expense 4,856,723 4,585,581
Income before income taxes and
cumulative effect of accounting change 1,826,793 1,451,039
Income taxes 675,914 551,395
Income before cumulative effect of
accounting change 1,150,879 899,644
Cumulative effect of accounting
change, net of
taxes of $8,832 15,037 -
Net income $ 1,135,842 $ 899,644
Basic earnings per share before
cumulative effect
of accounting change $ 5.12 $ 4.09
Basic earnings per share after
cumulative effect
of accounting change $ 5.05 $ 4.09
Diluted earnings per share before
cumulative effect
of accounting change $ 4.92 $ 3.93
Diluted earnings per share after
cumulative effect
of accounting change $ 4.85 $ 3.93
Dividends paid per share $ 0.11 $ 0.11
(1) Certain prior period amounts have been reclassified to conform to the
current period presentation for the Financial Accounting Standards
Board Staff Position, "Accounting for Accrued Interest Receivable
Related to Securitized and Sold Receivables under FASB Statement No.
140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities," that was issued April 2003.
2) In the fourth quarter 2003, the Company adopted the expense
recognition provisions of Statement of Financial Accounting Standard
No. 123, ("SFAS 123") Accounting for Stock Based Compensation, under
the prospective method for all awards granted, modified or settled
after January 1, 2003. Certain prior period amounts have been
restated in accordance with SFAS 123.
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates(1)
(dollars in thousands)(unaudited)
Reported Quarter Ended 12/31/03
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $31,297,123 $ 969,571 12.39%
Securities available for sale 5,816,001 52,328 3.60%
Other 3,679,088 65,884 7.16%
Total earning assets $40,792,212 $ 1,087,783 10.67%
Interest-bearing liabilities:
Deposits $21,604,968 $ 237,624 4.40%
Senior notes 6,734,569 123,409 7.33%
Other borrowings 7,661,016 62,649 3.27%
Total interest-bearing liabilities $36,000,553 $ 423,682 4.71%
Net interest spread 5.96%
Interest income to average
earning assets 10.67%
Interest expense to average
earning assets 4.16%
Net interest margin 6.51%
Reported Quarter Ended 9/30/03
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $28,949,372 $ 989,318 13.67%
Securities available for sale 5,702,955 49,440 3.47%
Other 3,480,727 64,267 7.39%
Total earning assets $38,133,054 $ 1,103,025 11.57%
Interest-bearing liabilities:
Deposits $20,302,524 $ 224,078 4.41%
Senior notes 6,065,935 114,989 7.58%
Other borrowings 6,891,889 60,037 3.48%
Total interest-bearing liabilities $33,260,348 $ 399,104 4.80%
Net interest spread 6.77%
Interest income to average
earning assets 11.57%
Interest expense to average
earning assets 4.19%
Net interest margin 7.38%
Reported Quarter Ended 12/31/02
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $27,259,764 $ 1,013,181 14.87%
Securities available for sale 4,571,735 50,283 4.40%
Other 2,243,012 50,200 8.95%
Total earning assets $34,074,511 $ 1,113,664 13.07%
Interest-bearing liabilities:
Deposits $17,076,822 $ 215,144 5.04%
Senior notes 5,563,574 108,474 7.80%
Other borrowings 6,332,192 59,014 3.73%
Total interest-bearing liabilities $28,972,588 $ 382,632 5.28%
Net interest spread 7.79%
Interest income to average
earning assets 13.07%
Interest expense to average
earning assets 4.49%
Net interest margin 8.58%
(1) Certain prior period amounts have been reclassified to conform to the
current period presentation for the Financial Accounting Standards
Board Staff Position, "Accounting for Accrued Interest Receivable
Related to Securitized and Sold Receivables under FASB Statement No.
140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities," that was issued April 2003.
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed (1) Quarter Ended 12/31/03
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $68,678,877 $ 2,295,802 13.37%
Securities available for sale 5,816,001 52,328 3.60%
Other 1,782,263 11,326 2.54%
Total earning assets $76,277,141 $ 2,359,456 12.37%
Interest-bearing liabilities:
Deposits $21,604,968 $ 237,624 4.40%
Senior notes 6,734,569 123,409 7.33%
Other borrowings 7,661,016 62,649 3.27%
Securitization liability 36,766,829 364,092 3.96%
Total interest-bearing liabilities $72,767,382 $ 787,774 4.33%
Net interest spread 8.04%
Interest income to average
earning assets 12.37%
Interest expense to average
earning assets 4.13%
Net interest margin 8.24%
Managed (1) Quarter Ended 9/30/03
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $63,691,261 $ 2,180,109 13.69%
Securities available for sale 5,702,955 49,440 3.47%
Other 1,627,898 9,501 2.33%
Total earning assets $71,022,114 $ 2,239,050 12.61%
Interest-bearing liabilities:
Deposits $20,302,524 $ 224,078 4.41%
Senior notes 6,065,935 114,989 7.58%
Other borrowings 6,891,889 60,037 3.48%
Securitization liability 34,156,144 339,182 3.97%
Total interest-bearing liabilities $67,416,492 $ 738,286 4.38%
Net interest spread 8.23%
Interest income to average
earning assets 12.61%
Interest expense to average
earning assets 4.16%
Net interest margin 8.45%
Managed (1) Quarter Ended 12/31/02
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $57,669,078 $ 2,085,069 14.46%
Securities available for sale 4,571,735 50,283 4.40%
Other 548,443 5,470 3.99%
Total earning assets $62,789,256 $ 2,140,822 13.64%
Interest-bearing liabilities:
Deposits $17,076,822 $ 215,144 5.04%
Senior notes 5,563,574 108,474 7.80%
Other borrowings 6,332,192 59,014 3.73%
Securitization liability 29,840,224 315,968 4.24%
Total interest-bearing liabilities $58,812,812 $ 698,600 4.75%
Net interest spread 8.89%
Interest income to average
earning assets 13.64%
Interest expense to average
earning assets 4.45%
Net interest margin 9.19%
(1) The information in this table reflects the adjustment to add back the
effect of securitized loans.
SOURCE Capital One Financial CorporationCONTACT: Paul Paquin, V.P., Investor Relations, +1-703-720-2456, or
Tatiana Stead, Director, Corporate Media, +1-703-720-2352, both of Capital One
Financial Corporation
Web site: http://www.capitalone.com
(COF)